Benefits of Investing in Discount Bonds
Investors seeking tax advantages and long-term capital accumulation for retirement, education funding or other long-range saving goals will find zero-coupon municipal bonds as an attractive investment.
Individuals can time the maturity of their investments to match their future needs. Some additional reasons to invest in zero-coupon municipal bonds are;
- Retirement planning – Zero-coupon municipal bonds can be used to supplement a retirement savings program. They are not, however, suitable for Individual Retirement Accounts (IRAs) or qualified pension plans because these plans already have tax-advantaged status.
- Education funding – A municipal zero portfolio can be structured to mature during a child’s or grandchild’s college years.
- Gifting – Assets given today under the annual estate and gift-tax exclusion can continue to grow with the tax benefits of zero-coupon municipal bonds.
- “Kiddie tax” – These types of bonds are attractive for gifting to minor children.
- Supporting an elderly parent – In today’s aging society, more people are spending large amounts of money providing care for their aged parents. Zero-coupon municipal bonds purchased now can help meet those future needs.
The best way to determine how to invest in a zero-coupon municipal bond is to work with a bond specialist. GMS bond specialists have the knowledge, experience and latest market information to help you determine what type of investment is best for your financial planning.